Is gold about to break out soon?
I’m seeing a fresh triangle consolidation pattern forming on its 4-hour chart, with price currently testing support.
Gold (XAU/USD) 4-hour Chart by TradingView
Gold prices have formed higher lows and hit resistance around the $2,700 mark, creating an ascending triangle that’s been holding since mid-November.
Price has retreated back to its triangle support while risk appetite improved in the past week, and it looks like support is holding so far.
However, the 100 SMA remains below the 200 SMA to suggest that the path of least resistance is to the downside.
Are we about to see a downside break from here?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on gold and the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
The gap between the moving averages has narrowed to hint at a potential bullish crossover. If this happens, gold bulls could charge again and take XAU/USD back to its triangle top near R1 ($2,707.45) or higher.
Sustained bullish momentum could even take gold up to test its all-time highs around $2,790 as a break higher could be followed by a rally of the same height as the chart formation.
If bears refuse to let up, on the other hand, keep an eye out for a selloff that’s the same size as the triangle if gold breaks below current levels. Look out for potential support around S1 ($2,608.73) then S2 ($2,568.73), too!
As always, watch out for other top-tier catalysts that could impact overall market sentiment, and make sure you practice proper position sizing when taking any trades!
